The Stress From Sallie Mae is Abusive. – Sue

My 28 year old daughter Laurie has incurred over 160,000 in student loans with Sallie Mae. They are relentless and even at times harassing her for payment.

They are wanting over 900.00 per month which she is not able to do at her job as a vet tech making 15.00 an hour.

She tried moving out for the first time since graduation but barely makes ends meet. My husband is the cosigner. (her stepdad). Biological dad hasn’t been around for 15 years and we are currently taking him back to court for some of the tuition according to the divorce decree he is supposed to pay half.

Sallie Mae won’t consolidate according to her income. They even call my 85 year old mother in law to try and get payment.

Laurie has tried to call numerous times to try and explain her situation but they won’t listen. She did not live at school, stayed home room and board free. She is now currently moving back home reluctantly because she just can’t support he rself with this debt.

She does not have any other outstanding debt (car, credit cards). How are other people making it with this company. Please help us!

How and where to we begin to get this matter at least affordable. We/ she knows it is debt owed but the amount per month is not allowing her to survive on her own. She is not on any type of aid either. The stress she is under because of them is truly abusive.

Please help!

Sue”

Dear Sue,

I’m so sorry to hear about your situation and the trap Laurie has fallen into. Sadly, she is not alone.

The first thing is to not just blindly assume the loans are private loans. If they are federal student loans then there are some good options. Sallie Mae does service some loans that qualify under the U.S. Department of Education reduced payment programs.

To find out if the loans are eligible for federal student loan programs the key is to see if the loans are listed in the National Student Loan Data System (NSLDS). You can click here and check to see if the loans are.

If the loans are private loans then the only relief you can hope to get is either from a program the private student loan holder offers or potential relief under a consumer bankruptcy. You can find out more about that here.

The tricky part of this is the fact there is a cosigner. A cosigner gets all the liability and responsibility of the loan with none of the benefit.

I am starting to see Sallie Mae sending out more settlement offers to pay off the balance for less than is owed. I have not seen anything consistent to generate offers when consumers ask.

Settling the debt for less than is owed can also result in a big tax bill if the debtor is not insolvent at the time of the loan forgiveness.

Unlike federal student loans that offer some loan forgiveness and payment reduction programs, private student loan lenders only offer at best, temporary loan reduction periods which cause the balance to grow when payments are not being made.

Private student loan lenders allowed kids to take out all sorts of loans, regardless what their future earning potential might be. It was a trap. It is a trap. The lender will say it is not their fault Laurie graduated and elected to make so little money. I’m not saying I agree, just that’s what they will say.

At least Laurie did graduated and got the benefit of the degree. Nearly 3 out of 4 student loan debtors never do.

If it is at all possible I would urge Laurie to stop letting this run her life. It is what it is and fighting back will not alter the private student loan situation.

If she does wind up defaulting on her debt she will wind up in collections and at that point you may be offered different options and who knows, maybe even an offer to settle the $160,000 for a lump sum payment of $60,000. If so, that would be a good offer.

Please post your responses and follow-up messages to me on this in the comments section below.

Thanks for the article. I am keeping current with my payments, but I also owe a large sum- $136,000 in private loans. Do you think it’s worth defaulting and going to collections just for the chance of an offer to pay-off the loan in a lump sum at a reduced amount?

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